San Francisco Bay Area Real Estate: Buy Now Or Wait It Out?

By: Errol Vincent

Probably the most popular real estate debate today centers around the San Francisco Bay Area home sales market and whether or not now is a good time to buy a home. With recent changes in the market, most buyers are sitting on the sidelines trying to weigh the pros and cons of jumping in to seemingly unpredictable and turbulent waters. While both home prices and home sales are falling nationwide, the market in the San Francisco Bay Area is a bit of an anomaly. According to DataQuick Information Systems, a real estate research firm, though fewer properties are selling in the Bay Area, and real estate inventories are growing, overall home prices are still going through the roof. It has been reported by news media that the median price for an existing single family home rose to a record $720,000 in April of 2007 though April's sales count was the lowest in 12 years. So what is driving the market, and is now a good time to buy?

The Wealth Factor
The Bay Area housing market is significantly impacted by the level of wealth shared by the people buying homes there right now. According to the California Association of Realtors, higher-priced markets have been performing better than lower-priced or "starter home" areas in terms of the strength of both sales and price. On the other end of the spectrum, recent sub-prime mortgage market woes have stifled the ability of people with little money to put down, and those who have poor or marginal credit; to qualify for a home loan. This segment is being squeezed out of the market by tougher lending requirements. With fewer people in the starter home demographic able to qualify for a home, both home prices and home sales in lower-priced areas have been stagnant or declining. Whether you are looking for a starter home, or you are looking to move up; if you are trying to determine whether or not now is the right time to buy, it really all depends on 1.) your credit, 2.) your overall ability to qualify for a loan, and 3.) your ability to come in with a significant down-payment.

If You Have a Weak Credit Rating, Clean Up Your Credit
In recent years, there really was a loan out there for almost everyone--though, if a buyer's credit was less than perfect it could really become costly. Today, however, the days of no down-payment loans are quietly fading into the distance even for the highly credit worthy. So, if your credit report shows excessive late payments, collection accounts, charge-offs or any other derogatory items, now would be a good time to put "homeownership" on the back burner and move "cleaning up your credit" to the forefront. That way, when a solid loan program is available for you, you will be able to enter into homeownership from a position of financial strength.

Taking Advantage of the Buyers Market
If your credit is strong, you have money to put down on a home, your mortgage payments are manageable for you, and you plan to stay put for more than 5 year; by all means throw your hat into the ring--especially if you are looking for a starter home in a moderately priced area. While you probably won't walk away with a "steal" the odds are in your favor that you will be able to purchase a home at a great price. Don't be overly concerned about whether or not home prices will slip further in the coming months. If you are planning to stay put for a little while, it really doesn't matter.

Give Up on Trying to Time the Market
What many people don't understand is that it is virtually impossible to "time the market." Over time, home prices in the San Francisco Bay Area have risen significantly. So, while the San Francisco Bay Area is in a unique type of slump consisting of slowing sales and rising prices, whether or not now is the right time to buy, depends on your individual situation.

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